Qantas (ASX:QAN) share price gains as Rex ramps up competition

Rex is launching a Brisbane to Melbourne route to fly alongside Qantas’.

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The Qantas Airways Limited (ASX: QAN) share price is in the green today despite heightened competition from another Australian airline.

Regional Express Holdings Ltd (ASX: REX) announced this morning it will add Brisbane to its domestic network.

The domestic airline’s chair stated he expects the new offering will force Qantas to drop the prices of its flights between the cities.

At the time of writing, the Qantas share price is $5.69, 0.71% higher than its previous closing price.

For context, the S&P/ASX 200 Index (ASX: XJO) is up 0.27% right now. Meanwhile, the All Ordinaries Index (ASX: XAO) has gained 0.35%.

Additionally, the Rex share price has gained 5.07% to trade at $1.56 this morning.

Let’s take a closer look at what the new competition might mean for Qantas.

Qantas’ increased competition

The Qantas share price is up despite new competition taking off in Australia’s ‘golden triangle’.

Rex will be operating double-daily flights between Brisbane and Melbourne from 17 December. Ticket prices will start at sale rates of $79 each.

The airline’s launch into the lucrative market between Melbourne, Sydney, and Brisbane has been its long-stated goal.

Rex deputy chair the Honourable John Sharp AM noted the impact today’s news could have on Qantas:

Every time we’ve entered a new market, airfares have fallen dramatically as Qantas and Virgin Australia scramble to match our prices and I have no doubt this will be the case again.

Both Brisbane Airport Corporation CEO Gert-Jan de Graaff and Melbourne Airport chief of aviation Lorie Argus agree Rex’s new offering will increase competition between airlines operating the popular Australian route.

Sharp also commented that Rex offers better value for money than other low-priced airlines, such as Qantas’ Jetstar:

Rex is a full service airline so these fares represent incredible value. Unlike our competitors, Rex passengers don’t get slugged with hidden or extra costs as all fares on our domestic jet network include free 23kg checked baggage and refreshments on board.

While it’s unlikely the news is weighing on the Qantas share price today, market watchers may want to keep an eye out for more planned growth from Qantas’ domestic competitor.

Rex has ambitions to continue adding new routes to its offerings, particularly in Queensland.

Qantas share price snapshot

Right now, the Qantas share price is flat compared to this time last month.

However, it is 15% higher than it was at the start of 2021.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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